Silicon Valley Bank’s Fall and the Way Forward for US Banking
Five charts follow the money as it vanished amid SVB’s damaging accounting decisions.
Silicon Valley Bank suffered probably the quickest bank run in history and the fastest bailout of depositors, too. The lender to the venture capital industry had operated under lighter rules and fewer restrictions than larger banks after a successful lobbying effort back in 2018. Until a few weeks ago, it was judged too small to cause any real damage if it hit problems, but the moment it got into trouble, everyone realized it was systemic after all.
In fact, the scale of SVB’s deposits rescued wasn’t much smaller than Washington Mutual, which failed during the 2008 meltdown and was taken over by JPMorgan Chase & Co. Depositor bailouts aren’t as rare as you might think. In the past 22 years, depositors at failing banks have been helped more often than they have been hurt in bank failures. Typically, a mix of public backstops and white-knight acquirers assume these obligations.